Marketers give social thumbs up

The company did a media buy that allowed them to target the age demographic, as well as fans of The Onion. The campaign generated twice AT&T's average sales for an online promotion, at one of the lowest cost-per-order rates across online media for all of 2010.
Beyond dot com

However, Facebook's greatest marketing potential may lie outside of Facebook.com. The company's Open Graph protocol allows marketers to integrate their websites or external applications into Facebook's "social graph," allowing retailers, publishers and merchants to show visitors what their friends clicked on or read.

One of the most prominent adopters of this Facebook API has been search engine Bing, which launched its "Friend Effect" tool in mid-May. It integrates the likes from friends and family into the search process. The shift to a more social search makes a strong Facebook presence even more important for brands aiming to get their links and products promoted in search.

Facebook's Open Graph can also be incorporated directly into campaigns. Digital agency Firstborn recently personalized a promotion for Wrigley 5 Gum using the API. When users already logged into Facebook visited 5React.com, they would see a screen that walked them down a hallway to a laboratory where video screens of their own friends and photos covered the walls.

"It was an eerily personal experience," says Firstborn's president Dan LaCivita. "It wasn't on Facebook, but it created that social experience."

Open Graph can even be taken outside the browser altogether. At this year's South by Southwest festival, Firstborn set up a kiosk for the drink brand SoBe where attendees could "Try Your New Look," using an interactive touchscreen to give themselves different hairstyles, sunglasses or other features. The video was recorded and the person received a quick response code. By scanning it, the video would post to their wall, taking content created in the real world and tying it back to Facebook.

While Facebook is where an increasing number of consumers develop their relationships with companies and learn about new products, it remains an open question whether the platform can move to the next step of e-commerce and direct sales. Startups like 8thBridge and Payvment enable companies like Delta Air Lines, 1-800-Flowers and Brooks Brothers to sell their products directly on Facebook, but data on the success of Facebook e-commerce has so far been tepid.

A study from Forrester Research released in April found that links posted on Facebook receive a 1% click-through rate and a 2% conversion rate, compared to email marketing, which enjoys averages of 11% click-throughs and 4% conversions. A report from digital analytics company Webtrends found even lower figures, reporting that click-through rates on Facebook dropped from 0.063% in 2009, to just 0.051% in 2010.

"In spite of the fact that hundreds of millions of people around the world have Facebook accounts, the ability of the social network to drive revenue for e-commerce businesses continues to remain elusive," writes Sucharita Mulpuru, VP and principal analyst at Forrester.

She describes Facebook's place in the marketing mix for consumer packaged goods and other products as "top of the funnel" — more valuable as a branding tool than for generating sales directly.

Facebook disputed this, pointing out that the company's referral traffic to Amazon.com grew 328% year-over-year in October 2010, while Google's dropped 2%, and referral traffic to eBay grew 81% for Facebook, while it dropped 3% for Google.

Scot Wingo, CEO of ChannelAdvisor, an e-commerce software provider, believes that while an "f-commerce" service might not have arrived, Facebook's track record makes it worth preparing for.

"There will be a lot more innovation around Facebook," explains Wingo. "And when it happens, it will happen very quickly. We're advocates for being ready for that, watching what is happening and having a page, because when the spark hits, it's not going to be a slow smolder."